MN Rental Caps

Dean, et al. v. City of WinonaSlamming the Door on Rental Bans; Winona Homeowners Stand Up for Their Property Rights

IJ clients Ted and Lauren Dzierzbicki are wondering can the government arbitrarily restrict the property rights of some but not others?

In America, renting your property is a legitimate and historical use of property ownership. Americans have always been able to rent out a home they own, whether it was to help fund an investment or to help make ends meet. But government officials in Winona, Minn., are imposing a ban on the number of homeowners who can rent out their properties, harming both homeowners and renters alike. Not only is this policy unwise, it is also unconstitutional.

Under this rental ban, the government grants only 30 percent of homeowners on any given block its permission to rent out their home. Whether someone gets a license is the luck of the draw. In areas with few renters, some get new licenses. In areas with more renters, no one gets a new license.

The ban is affecting many of Winona’s homeowners, like Ethan Dean, Holly Richard and Ted and Lauren Dzierzbicki. Each put their homes on the market hoping to sell them, but the economic climate has made it difficult to sell. Instead of letting the unused homes sit empty, they want to rent them out to help them make the mortgage payments. But since Winona has imposed the ban and they live on blocks where 30 percent of the homeowners on the block were given licenses, they cannot rent their homes. If Winona does not lift the ban, some of them even face foreclosure.

In addition, being able to rent a home increases its value, but Winona law undermines property values at a time when property values are already falling.

Denying property owners the right to rent out their home violates the Minnesota Constitution’s protections of our fundamental property rights. That’s why on October 25, 2011, the Institute for Justice teamed up with Winona homeowners to file suit and fight the city’s rental ban.

The case has national implications for property rights because it seeks to answer an important constitutional question: May the government arbitrarily restrict the property rights of some but not others?